PThe v. State

imprisonment and pay a fine of Rs.5000/= in default to undergo sixmonths rigorous imprisonment.4. The fourth and fifth accused were convicted under section 120read with section 409, 420 of the Indian Penal Code and section 13(2) read with section 13(1)(d) of the Prevention of Corruption Actand were sentenced to undergo two years rigorous imprisonment eachand pay a fine of Rs.10,000/= each in default to undergo six monthsrigorous imprisonment each, convicted under section 409 read withsection 109 of the Indian Penal Code and were sentenced to undergorigorous imprisonment each and pay a fine of Rs.10,000/= each indefault to undergo six months rigorous imprisonment each andconvicted under section 420 of the Indian Penal Code and weresentenced to undergo four years rigorous imprisonment each and pay afine of Rs.1,00,000/= each in default to undergo one year rigorousimprisonment each. In the event of payment of fine amount by thefourth and fifth accused, a compensation of Rs.50,000/= each wasordered to be paid to PW61, PW68 and PW72. 5. The sixth accused was convicted under section 120(b) readwith section 409, 420 of the Indian Penal Code and section 13(2)read with section 13(1)(d) of the Prevention of Corruption Act andwas sentenced to undergo one year rigorous imprisonment and pay afine of Rs.2500/= in default to undergo three months rigorousimprisonment, convicted under section 409 read with section 109 ofthe Indian Penal Code and was sentenced to undergo one year rigorousimprisonment and pay a fine of Rs.2500/= in default to undergo threemonths rigorous imprisonment and convicted under section 420 of theIndian Penal Code and was sentenced to undergo one year rigorousimprisonment and pay a fine of Rs.2500/= in default to undergo threemonths rigorous imprisonment. 6. On the side of the prosecution P.Ws.1 to 80 were examined andExs.P1 to 135 were marked. On the side of the defence, no witnesswas examined, but, Exs.D1 to D25 were marked. 7. The brief case of the prosecution reads as follows:-A1 was the then Handloom Minister. During the year 1991, theGovernment proposed to distribute free dhoties and sarees to thedowntrodden people in the State of Tamilnadu on the eve of PongalFestival 1992. In order to fulfil the order, the Governmenttransferred rupees 12.58 crores to the Tamilnadu Textile CroporationLimited for the purpose of procuring and distributing sarees anddhoties. The Government also specified certain conditions for thepurpose of procurement by tender process and also payment of money tothe selected tenderers by getting Bank Guarantee. Based on these https://hcservices.ecourts.gov.in/hcservices/ procedures, the Textile Corporation processed the tenders submittedby twenty one firms. Out of the twenty one firms, six firms wereselected and were called for enquiry. By that time, A4 representingon behalf of two firms gave a letter stating his inadequate positionto supply the goods and also requested to distribute the orders forsupply of clothes proposed to be placed with them to the other threefirms viz., Balaji Agencies, Cotton Yarn Textiles and RajaramApparels. The above mentioned three firms entered into an agreementwith the Textile Corporation on 18.12.1991. The Balaji Agencies wasrepresented by A4's mother. Cotton Yarn Textiles was represented byA4's wife and Rajaram Apparels was represented by A4. All the threefirms opened bank accounts in the Lakshmi Vilas Bank, Coimbatore.All the three firms were introduced for opening bank account by A4 atthe behest of A5 who was the long standing customer of the LakshmiVilas Bank, Coimbatore. Thereafter, A4 and A5 looked after thetender process and A6 who was the then Manager of A5 company alsolooked after the bank affairs. 8. After entering into the agreement on 18.12.1991, in which itwas specifically stated that Bank Guarantee had to be given, thethree firms were individually informed of the necessity to give BankGuarantee for drawing first instalment advance amount of 25% from theTextile Corporation by letter dated 23.12.1991. Whereas, all thethree firms gave a letter on 24.12.1991 expressing their inability togive Bank Guarantee and insisted for release of the first 25% advanceamount without any security. 9. At this point, A1 and A2 intervened and directed theofficials to release the first 25% advance amount without anysecurity. But, the officials of the Government and the TextileCorporation raised their objections pointing out the orders of theGovernment insisting for getting security for the release of advanceamount. A1 and A2 pressurized, forced and threatened the GovernmentOfficials to release the first 25% advance amount without anysecurity.10. On the intervention of A1 and A2, the Balaji Agenciesreceived the cheque for the first 25% advance amount from thedepartment concerned without giving the stipulated security.Thereafter, the other firms were also provided with the first 25%advance amount without furnishing security. 11. The three firms supplied dhoties and sarees on their own tovarious destinations as directed. But, the sarees and dhotiessupplied did not have the length and breadth as per thespecification. Number of Tahsildars and other officials complained to https://hcservices.ecourts.gov.in/hcservices/ the Government regarding the supply of inferior quality sarees anddhoties. Inspite of the objections raised by the officials of thedepartment, A1 and A2 insisted them to release the second 25%advance amount to the three firms. Though it was specifically broughtto the knowledge of A1 regarding the inferior quality and poor supplyfor the amount already released, A1 personally visited Coimbatore on9.1.1992 and threatened the officials to release the remainingamounts. 12. The first accused, having been not satisfied with theprogress in disbursement of amount to the firms, put a note to thethen Chief Secretary for transferring the Official who was in-chargefor the disbursement of the advance amount. Only on the instigationof A1 and A2, A3 was appointed as Managing Director of TamilnaduTextile Corporation in the place of Mr.Kanagaraj, PW2. Afterassumption of office by A3, the amounts were disbursed oninstruction by A1 and A2 without any hitch. But, inferior qualitygoods were supplied. After A3 assumed office, A4 and A5 procuredsarees meant to be distributed for the poor people in at the Stateof West Bengal with the seal of West Bengal Government thereon. A4and A5 clandestinely distributed them in the State of Tamilnadu. 13. During the short supply of materials, the respectiveCollectorate staff were made to enquire the existence of the firms.But, to the shock and surprise, there were no such firms in the saidaddress given in the tender forms. On verification with thecommercial Department, it came to light that the firms were notregistered and no tax was also paid by them. 14. Thus, A1 and A3 by using their official position, procuredsarees at a lesser rate viz., 50% of the rate fixed by the Governmentfrom various places including West Bengal through A4 and A5 anddistributed the same to the people of Tamilnadu on the eve of thePongal Festival 1992. A2 who is the nephew of A1 coordinated withA3, A4 and A5. A6 played a vital role in maintaining the BankAccounts and preparing bogus bills from the shops of Textile Dealerswho were actually selling textiles.15. In view of the above, A1 to A6 entered into a criminalconspiracy and A1 and A2 selected the firms of A4, A5 recommended foropening bank accounts with the help of A6 and thus A1 to A6 conspiredto cheat the Government of Tamilnadu by floating three fictitiousfirms, opened the Bank accounts with false address and procured verypoor and inferior quality sarees and dhoties and misappropriated theGovernment fund. https://hcservices.ecourts.gov.in/hcservices/

16. Learned Senior Counsel appearing for the first accused andthe learned counsel appearing for the other accused would vehementlysubmit that it was only the Government which selected the tenderers.The accused have nothing to do with the selection of the tenderers.Exs.P14 to P16 agreements were executed between the tenderers whosupplied dhoties and sarees for free distribution and the Tamil NaduTextile Corporation (TNTC). Though the first accused recommended forthe transfer of PW2, it was only the Chief Minister, who ultimatelytook the decision as per the evidence of the Chief Secretary, who wasexamined before the court and ultimately, A3 who had got sufficientexperience in Handlooms and Textiles, was appointed in his place.The transfer of PW2 was recommended only to promote the efficiencyand also to complete the work at a lightning speed. PW2 himself hadadmitted that he had gone on medical leave on account of his ill-health. Mr.Muneer Hoda examined as PW75 was wantonly deleted fromthe criminal prosecution though he was implicated originally in theFIR. The prosecution failed to establish that the levy of penaltyshall be approved by the Finance Department. If at all, A1 wasinclined to favour the suppliers, he would not have imposed penaltyand blacklisted the suppliers. It is further submitted that thesanction in fact preceded the note prepared by PW40 to the effectthat it was a fit case for sanction. Mr.Devaraj, who signed onbehalf of the Governor of Tamil Nadu in the order of sanction was notexamined before this court to speak about the mind of the sanctioningauthority. On account of the external pressure, sanction washurriedly obtained and therefore, the sanction is vitiated. Noreason has been assigned by the learned Sessions Judge to split upthe case as against A2 at the time of pronouncing the judgment asagainst the other accused. The new incumbent pronounced the judgmentonly based on the very same materials which were available at thetime when the case of A2 was split up by his predecessor. Thesuppliers were not associated for checking up the quality and thealleged shortfall of supplies made by three firms. The defectivedhoties and sarees with lesser quality were not produced before thecourt as material objects. The test check up was not done as per theinstructions flowed from the Government. No mahazar was prepared forthe seizure of the defective dhoties and sarees. One Mr.R.S.Manian,who allegedly gave a complaint alleging lack of quality of dhotiesand sarees supplied free of cost by the Government was not examined.The evidence of Pws.1 and 2 that A1 warned PW2 with seriousconsequences if advance was not made to the suppliers and alsoconveyed his displeasure through A2 is found to be contradictorywith each other. No witness spoke to the aforesaid unbecoming act ofA1 and A2. A5 had no connection with the supply transaction. A6after all worked under A5. The Government imposed a condition to https://hcservices.ecourts.gov.in/hcservices/ furnish security for 25% of advance being disbursed by the Governmentto the suppliers only after the agreements, Exs.P14 to P16 wereentered into between the suppliers and the TNTC. Therefore, there isno valid reason for insisting bank guarantee for 25% advance as acondition precedent for releasing the advance the suppliers wereentitled to as per the agreement. Therefore, the learned SeniorCounsel and other counsel for accused/appellants would submit thatthey are entitled to acquittal. 17. Learned Special Public Prosecutor appearing for the Statewould submit that the over enthusiasm exhibited by A1 and A2 inreleasing the advance to A4 despite the direction of the Governmentto insist for bank guarantee for the advance and their role inshifting PW2 and bringing in A3 in his place would go to show thatthere was a criminal conspiracy to cause loss to the Government. A1and A2 knowing full well that there was no firm floated by A4 was inexistence, selected three firms which were fictitious in nature. A5and A6 knowing full well that the firms were fictitious in nature,recommended and opened bank account in Laxmi Vilas Bank, Coimbatorein the name of those three firms. A1 to A6 had common agreement tocheat the Government and thus they had effectively conspired andcommitted the offence of cheating and misappropriation. A1 used hisofficial position as a public servant and Ministership of theDepartment for transmitting the object of criminal conspiracy. A2 isnone other than the nephew of A1. A3 was specifically posted in theplace of PW2 for the purpose of releasing the amount of advance asinstructed by A1 and A2. A4 to A6 prepared and supplied materialsand received the cheques from the Government. The Governmentinstruction to insist for bank guarantee for releasing the advancepayment was totally ignored by the accused. The anger of A1 wasreflected in the transfer of PW2 and substitution in his place by A3.A6 Muthusamy presented seven forged cheques as genuine to Laxmi VilasBank Uppilipalayam Branch and got the amounts released. There arevoluminous evidence on record to show that the fourth accused,through fictitious firms, having hatched conspiracy with otheraccused, supplied only third rate dhoties and sarees to theGovernment for free distribution and thereby all the accused causedheavy loss to the Government. Therefore, he would submit that thereis no warrant for disturbing the well considered and well meritedjudgment of the Trial Court. 18. Conspiracy consist in the agreement of two or more personsto do an unlawful act or to do a lawful act by unlawful means. Theessence of the offence of conspiracy is the fact of combination ofagreement. It is not enough that two or more persons pursued thesame unlawful object at the same time or in the same place. It is https://hcservices.ecourts.gov.in/hcservices/ very much necessary to show a meeting of minds that is to say aconsensus to achieve an unlawful purpose, but, it is not necessarythat each conspirator should have in communication with each other. 19. Conspiracy is hatched in secrecy. Therefore, it may not bepossible to establish a conspiracy by direct evidence. The facts andcircumstances surrounding the role of each and every accused shouldprovide an inference to conclude the existence of conspiracy and itsavowed object. 20. Let us now take up the charges framed as against A1E.Madhusudhanan. It is found that there is no direct evidence let inby the prosecution to establish that A1 to A6 conspired together andcommitted the offence under section 120B of the Indian Penal Code .The prosecution mainly banks on the circumstantial evidence to provethe charge of conspiracy. The court will have to find whether thecircumstances projected by the prosecution inspire confidence toconvict the accused under section 120B of the Indian Penal Code . 21. As far as the first accused is concerned, there is virtuallyno evidence to show that he was in any way involved in selecting thesuppliers which process was embarked upon by the Committeeconstituted for the said purpose. PW2 Kanagaraj, Managing Directorof TNTC, Coimbatore and PW3 D.Chandrasekar, Joint Director,Handlooms, Chennai have categorically spoken to the fact that thesuppliers were selected by the committee consisting of PW2, PW3 andone Subbiah. It appears that the tenders received from the intendingsuppliers were tabulated as found from Ex.P11 and despatched to PW75Mr.Muneer Hoda, Director of Handloom and Textiles, Chennai. Orderswere placed to the suppliers who quoted the lowest prices. Therefore,as far as the selection of suppliers are concerned, there is dearthof evidence that the first accused had played any pivotal role. 22. On a perusal of the proceedings under Ex.P120 dated11.12.1991, it is seen that the proposal to clinch the deal with thesuccessful tenderers were sent to the Chief Minister by the Secretaryspecifically listing the names of successful tenderers. Ex.P120 alsowould establish that the successful tenderers were selected by theorders of the Chief Minister of Tamil Nadu. The Chief Minister alsowas pleased to approve the draft agreement proposed to be enteredinto with the successful tenderers and release of 50% of the totalcost of the procurement amounting to rupees 12.50 crores in advance.The above facts and circumstances would go to show that the veryselection of the tenderers, the terms of the agreement and theadvance proposed to be released were approved by the Chief Ministerand A1 had played no role in the matter. Nothing has been produced https://hcservices.ecourts.gov.in/hcservices/ before this court to show even distantly that A1 was part of theselection process and fixation of terms of the agreement. 23. Ex.P58 is the proceedings emanated from the Secretary toGovernment to the Director of Handloom and Textiles, Kuralagam. Theaforesaid proceedings would reveal that the original deadline viz.,31.1.1992 fixed for the supply of dhoties and sarees was extendedupto 31.3.1992 by the Secretary to Government. 24. The Handloom Ministry submitted a proposal as found fromEx.P74 dated 23.3.1992 suggesting cancellation of the tenders in viewof the unsatisfactory performance of the private suppliers within theextended time limit fixed for implementation of the scheme fordistribution of free dhoties and sarees and placement of orders toCo-optex for supplying the remaining unsupplied quantity of dhotiesand sarees. It is also found that the Chief Minister, based on theproceedings, Ex.P74, approved the said proposal on 7.8.1992. If atall the first accused hatched a conspiracy to loot the GovernmentExchequer in order to benefit the suppliers, his Ministry would nothave come out with the proposal to cancel the tenders and placeorders to Co-optex for supplying the remaining unsupplied quantity. 25. The Tamil Nadu Textile Corporation, Coimbatore had enteredinto an agreement for supply of dhoties and sarees with thesuppliers. It is only the TNTC which was expected to take action asper the terms of the agreement if it came to its notice any violationof any of the terms and conditions of the agreement.26. The evidence of PW1, PW2 and PW56 is relied upon by theprosecution in order to prove the charge as against the firstaccused. PW1, PW2 and PW56 have come out with a version that thefirst accused forced them to pay advance cost of procurement ofdhoties and sarees to the suppliers. Exs.P14 to P16 are theagreements entered into between the Tamil Nadu Textile Corporation,Coimbatore represented by its Managing Director and the suppliersviz., M/s.Raja Ram Apparel, M/s.Balaji Agencies and M/s.Cotton YarnTextiles. Clauses 4, 5 and 7 of the said agreement are found to berelevant. Clause 4 would read that the supplier shall complete thesupply before 31.12.1991. Delay in supply of goods if any willattract penalty of Rs.5/= per dhoti and Rs.8/= per saree per day.The supplier also shall deposit one percent of the value of thecontract with Tamil Nadu Textile Corporation. The Tamil Nadu TextileCorporation, Coimbatore is bound to pay advance amount equivalent to25% of the value of the contract to the supplier at the time ofplacing firm order and the same shall be adjusted in one lumpsum,the moment the bills are presented after the entire supply of ordered https://hcservices.ecourts.gov.in/hcservices/ quantity is over. Though the agreement does not bear the date, it isfound that the suppliers have put their signature with the date18.12.1991. The aforesaid terms and conditions would disclose thatthe suppliers are entitled to get 25% of the value of the orders,but, surprisingly, the Finance Department was pleased to issue thecommunication dated 21.12.1991 under Ex.P54 to the Managing Directorof TNTC through the Director of Handloom and Textiles that beforereleasing any amount to the suppliers, the Corporation should ensurethat there was adequate security for the payments. No payment shouldbe made unless TNTC was sure that the fund was secured and shouldtake full responsibility for the releases. The tenderers might berequested to produce bank guarantee before giving any advance paymentto them. The Managing Director of TNTC was requested to scrupulouslyfollow the said instruction issued by the Government through FinanceDepartment before making any advance payment to the suppliers. 27. Firstly, it is found that the said communication issued bythe Finance Department dated 21.12.1991 marked as Ex.P54 cannotoverrule the terms and conditions entered into between TNTC and thesuppliers on 18.12.1991 under Exs.P14 to P16. The suppliers areentitled to seek for release of advance of the value of the ordersplaced with them as per the terms of the agreement under Exs.P14 toP16. The communication sent by the Finance Department to the TNTCwill not restrain the suppliers who are governed only by the termsand conditions found in the contract. 28. PW1, the Finance Controller had insisted that the suppliersshould produce bank guarantee before disbursement of advance paymentof 25%. He has made it clear that no advance payment would be madeunless the bank guarantee is furnished by the suppliers. In theabove background of the case, it is alleged that the the firstaccused contacted PW1 over phone and informed him that 25% advancepayment should be made to Selvaraju A4 but, PW1 had reiterated sayingthat the Finance Department had insisted that the bank guaranteeshould be given towards the payment of advance of 25%. The allegationis that the first accused posed a question to PW1 as to whether theorders of the Finance Department would prevail over the orders of"Amma". The serious allegation is that the first accused threatenedPW1 with dire consequences if the instruction flowed from him wasnot adhered to. But, PW1 informed the first accused that if any telexmessage was received from PW75, Director of Handloom and Textiles, hewas prepared to release the amount. 29. PW2, the Managing Director of TNTC would depose that he wascalled by the first accused over phone and asked to give advance tothe three suppliers. A1 informed PW2 that if the advance was not https://hcservices.ecourts.gov.in/hcservices/ paid, the suppliers might not be in a position to make suppliesbefore Pongal festival. PW2 brought to the notice of A1 that theFinance Department had issued a direction to obtain security. But,at the same time, A4 expressed his inability to give bank guaranteefor the 25% advance sought for by him. PW2 further communicated tothe first accused that problem would arise if bank guarantee asdirected by the Finance Department was not given by the suppliers.The first accused informed PW2 that he would talk to PW75 Mr.MuneerHoda. 30. PW56, the Manager (Marketing) would depose before the courtthat on 26.12.1991, A6 Muthusamy sought for 25% advance after givingbank guarantee for 1%. But, PW56 referred the matter to PW1 whoinformed him that 25% advance could not be released unless bankguarantee for 25% was given. After some time, PW1 came and informedPW56 that the Handloom Minister contacted him over phone and askedhim as to why he has not released the advance payment. PW1 furtherinformed PW56 that he had replied to the Handloom Minister that noadvance amount could be paid without bank guarantee as stipulated bythe Finance Department. 31. It is pertinent to note that PW1 had admitted that he wasnot familiar with the voice of the Minister as he never spoke to himearlier. It is his firm assertion that it was only the telephoneoperator who connected him to the call made by the Minister. Neverhad he stated before the investigating officer that he was connectedto the Minister through the telephone operator. He had also notstated before the investigating officer that he informed PW2 aboutthe telephone call he received from the Minister. On 30.12.1991, hehappened to meet PW75 the Director of Handloom and Textiles atChennai, but, for reasons best known, he had not informed PW75 hisboss about such telephone conversation made by the Minister to him.Surprisingly, he never disclosed the interaction he had with theMinister to anyone till he was examined by the investigating officeron 9.11.1996. 32. PW2 Mr.Kanagaraj, Managing Director of Tamil Nadu TextileCorporation, Coimbatore would depose that PW1 connected telephonecall of the Minister to him through telephone intercom, saying thatthe Minister was on the line. But, PW1 did not disclose that hetransmitted the call received from the Minister to PW2. PW56, on hispart, would depose that PW1 informed him about the telephonicconversation he had with A1. But, PW1 is very silent about such adisclosure to PW56 regarding the telephonic conversation he had withthe Minister. PW1, PW2 and PW56 had met PW75 the Director ofHandloom and Textiles at Chennai. PW75 was not briefed of any such https://hcservices.ecourts.gov.in/hcservices/ threatening call made by the Minister to PW1. One would expect thatPW1 and PW2 being the subordinates of PW75 would have definitelyinformed PW75 about such a shocking conversation, more especiallywhen the discussion centered around the payment of advance to thesuppliers. PW2 has given up, during trial, his original stand beforethe investigating officer that he was directly contacted by theMinister. It is his deposition that it was only PW1, who called himover intercom and gave connection to the Minister. PW2 has furtherdeposed before the court that the Minister did not express his desireto talk to anybody else in the office after the conversation with himwas over. But, the investigating officer, PW80 would state that PW2disclosed to him during investigation that the Minister, afterconversing with PW2 wanted to talk to PW1 and PW1 was asked to attendthe call of the Minister. PW2 has come out with a quite contradictoryversion before the court as to the manner in which the call wasattended by him and PW1. It is not the stand of PW1 during thecourse of trial that PW2 called him after attending a call from theMinister and asked him to talk to the Minister. On the other hand,he would depose that he spoke to him directly. The aforesaidinconsistent, self-contradictory and inter-inconsistent stand wouldgo to cast a cloud on the case of the prosecution that A1 contactedPW1 over phone and threatened him to make advance payment to thesuppliers. Even during the course of trial, PW2 has not come outwith a version that he was threatened by the Minister. 33. On a careful scrutiny of the evidence of PW1 N.K.Srinivasan,Finance Controller, Tamil Nadu Textile Corporation, PW2,Mr.Kanagaraj, Managing Director, Tamil Nadu Textile Corporation,Coimbatore, PW9 Mr.M.A.Perumal Raja, PW56 Mr.Govindaraj, MarketingManager, Tamil Nadu Textile Corporation and PW62 Mr.P.Shankar,Secretary, Handloom Department, it is found that 25% advance amountwas released to the suppliers only with the approval and sanction ofPW75, the Director, Handloom and Textiles. PW1 himself would admitthat as per the agreement entered into between TNTC and thesuppliers, 25% advance amount had to be made against one percentearnest money deposit or equivalent bank guarantee given by thesuppliers. The said terms of the agreement were accepted by theGovernment. The direction under Ex.P54 to go in for security for thepayment of advance amount to the suppliers was issued subsequent tothe agreement entered into between the parties. It appears, thesuppliers insisted for 25% advance amount on furnishing 1% EMD orbank guarantee. But, PW1, had insisted that bank guarantee should befurnished for releasing the advance amount. PW1 and PW2 hadcontacted PW75 over phone. He asked them to release the advanceamount without insisting for bank guarantee. He also promised themthat he would take earnest steps to withdraw the directions issued by https://hcservices.ecourts.gov.in/hcservices/ the Government under Ex.P54. PW1 has categorically deposed that onlyon the instruction of PW75, the advance amount of 25% was released.The proceedings dated 13.1.1992 marked as Ex.D5 would clearly showthat PW1 had made an endorsement on the note prepared by PW9 thatonly as per the instruction of the Director of Handloom and Textiles,PW75, the advance amount was released. PW2 also has subscribed hisinitial as Managing Director just below the above endorsement. It isnot the version of PW75 that he was influenced by A1 for releasingthe amount. PW1, PW2 and PW9 have released the advance amount onlyas per the direction of their superior, PW75. It is quite clear thatA1 had not influenced the decision taken by PW75 and the execution ofthe directions of PW75 by PW1, PW2 and PW9. 34. In the proceedings dated 18.12.1991 marked as Ex.D7 issuedby PW2, it is stated that the advance amount could be released ongetting 1% earnest money deposit or bank guarantee for the equalamount from the suppliers. In the letter, Ex.D9 dated 28.12.1991written by PW2 to PW75, he has clearly stated that he contacted PW75over phone and the latter instructed him to act as per the agreementand make payment of advance after inspecting the goods supplied. PW2would also admit that after consulting the Director, PW75, it wasdecided to release 25% advance amount and the advance amount was, infact, released. It is admitted by PW2 that advance amount was paidto three suppliers as per the proceedings, Ex.P111 dated 10.1.1992after getting approval of PW75. It is also admitted that about sixcrores of rupees were disbursed as advance after thorough discussionin the Board Meeting. In the letter, Ex.D12 dated 30.12.1991 writtenby PW2, there is a reference as to the discussion about the releaseof advance to the suppliers with PW75, Director of Handloom andTextiles, Chennai on 30.12.1991 in the presence of PW56, Manager(Marketing). PW2 and PW75 were aware of the inconsistency existedbetween the agreements, Exs.P14 to 16 and the proceedings, Ex.P54issued by the Finance Department. They did not venture to go in fora fresh agreement, instead they decided to release 25% of the advanceas per the agreement in existence with the fond hope that thedirection issued by the Finance Department would be revised. PW2 hascategorically stated that he released the advance amount to thesuppliers not out of the pressure given by the Minister but on thebasis of the directions issued by PW75. 35. PW19 is a Dummy Official letter written by PW2 to PW75Mr.Muneer Hoda. It is not an out and out official communicationwhere he is not supposed to articulate certain outward pressures heallegedly received. The Dummy Official letter is a communicationbetween one to one. PW2 would categorically admit that he has notstated anything about the request made by the first accused on https://hcservices.ecourts.gov.in/hcservices/

9.1.1992 to pay advance to the suppliers in the said Dummy Officialletter, Ex.P19. On a perusal of Ex.P19, it is found that there is noreference as to the request emanated from first accused for makingpayment of advance to the suppliers. It is his admission that hehimself released the advance amount to the tune of Rs.12.50 crores ason 13.1.1991 beforeever he proceeded on medical leave. PW80, theinvestigating official in this case also would state that theinvestigation would disclose that PW2 in fact released the advanceamount to the tune of 12.50 crores as on 10.2.1992 when PW2 actuallyproceeded on medical leave. 36. PW56 Mr.Govindaraj, Manager (Marketing) TNTC, Coiimbatorewould dislcose that he in fact contacted PW75 over phone on 26.2.1991and asked him to release 25% advance to Balaji Agencies. His furtherversion is that PW75, having assured that he would prevail upon theauthorities who issued the order, Ex.P54 to raise the same, directedPW56 to release the advance amount. Therefore, PW56 releasedRs.1,96,12,000/= to Balaji Agencies as advance as per the advice ofPW75 and PW1. PW1, PW2 and PW56 had met PW75 at Chennai on30.12.1991. PW75 informed them that the scheme of the Chief Ministershould not suffer on account of non-payment of advance. Therefore,it was his advice that the advance amount sought for by the suppliersshould be immediately released. It is found that PW2 contactedPerumal Raja, PW9 over phone and asked him to releaseRs.2,18,19,000/= to each of the firms viz., Raja Ram Apparels andCotton Yarn Textiles being 25% advance payable to them. Again, therewas payment of 25% advance on 13.1.1992 to those three suppliers.Had PW75 not given clearance for release of the advance amount, thosetop officials would not have released the advance. It is found thatPW2 was the Managing Director of TNTC at the time of payment ofadvance. The alleged pressure emanated from A1 was totally ignoredby those top officials. They had acted only on the advice of PW75who wanted to see that the scheme floated by the Chief Minister wasnot defeated. 37. PW75 has categorically stated that the very distribution ofdhoties and sarees was an important scheme floated by the Governmentand the Government wanted to implement the scheme within a short spanof time. Therefore, he wanted to take follow up action immediately.He would further depose that the Government of Tamilnadu allotted12.5 crores to TNTC which was 50% of the said scheme as it found thatdelay in making payment of advance would derail the implementation ofthe scheme within the prescribed time. As per the version of PW75,PW2 placed an agenda regarding the payment of 25% advance to thesuppliers before the Board Meeting that was held on 31.12.1991. Hewould also admit that no order from the Secretary to Government for https://hcservices.ecourts.gov.in/hcservices/ releasing the advance was necessary and the TNTC being the party tothe contract was at liberty to decide the issue regarding payment ofadvance to the suppliers. 38. The pressure with threatening tone alleged to have beenmounted by the first accused gets vaporised in the face of theaforesaid admissions made by the witnesses during the course of trialin the background of the contemporaneous records produced and theattending circumstances emerged therefrom. It is quite clear thatthe top officials had taken the decision in order to save the pivotalscheme floated by the Government even ignoring the writ flowed fromthe Finance Department which would not have binding force on thesuppliers who were not parties to such a writ and were bound onlyby the terms of the agreements, Exs.P14 to P16 entered into betweenthemselves and TNTC, Coimbatore. In fine, it is found that therelease of advance payment to all the three suppliers was done by PW1and PW2 and other officials only on the considered advice of PW75,Mr.Muneer Hoda. 39. It is alleged by the prosecution that PW2 was transferredand A3 was substituted in his place by A1 to suit his convenience.PW49 was the Chief Secretary at the relevant point of time oftransfer of PW2 and posting of A3 in his place. The Chief Secretaryhas deposed before the court that only in order to meet theefficiency in Handloom and Textiles Department, A1 maderecommendations for approval. It is found that A1's recommendationwas placed before the Chief Minister and it was only the ChiefMinister who passed an order transferring PW2 from TNTC and postingA3 in his place. The Chief Minister was the competent authority foreffecting such transfers, the Chief Secretary has deposed before thecourt. The Chief Minister is not bound to accept all therecommendations of the Minister. The Chief Minister has everyauthority to accept or reject the recommendations of the Ministerdepending upon the merit of the plea for transfer. 40. It is in evidence that A3 was working in Melur Co-operativeSpinning Mills prior to his transfer and PW2 was the Commissioner ofCorporation prior to his transfer to TNTC. It is convincinglycontended by the defence that A3 had adequate experience in Textilescompared to PW2. In the estimation of the top officials, the schemefor free distribution of dhoties and sarees was an important one andthe Government was bent upon implementing the same within ashortwhile. A1 did not deny that he recommended the transfer of PW2,but, it is found that the ultimate decision of transfer was taken bythe Chief Minister. An advance of rupees 12.5 crores was released tothe suppliers and only goods worth rupees three crores alone were https://hcservices.ecourts.gov.in/hcservices/ supplied by the suppliers during the tenure of PW2 as ManagingDirector, TNTC as per the investigation done by PW80. No wonder, theGovernment had felt the necessity to post a more competent person whohad extensive experience in the Textile field to overcome thestumbling blocks in the execution of the scheme at a fast pace. Itis also the admission of PW2 that he went on medical leave as he wasreally unwell in the month of January 1992. He had been on leave for2-1/2 months right from 10.2.1992. Therefore, it appears, theGovernment took a decision to transfer PW2 and substitute A3 in hisplace. No ill-will or motive can be attributed to A1 for therecommendation he made for replacement of PW2. 41. It is alleged that the first accused had imposed penalty ofjust Rs.50,000/= to each of the three suppliers though it attractedmore penalty. The agreement was between TNTC and the suppliers. TheTNTC had to implement the terms of the agreement entered into betweenTNTC and the suppliers. Even as per the terms of the agreement, ifthere is any breach of the conditions found in the agreement, it wasonly the TNTC who should take action as against the suppliers. A1 inhis capacity as Minister had no role to play with respect thereto.42. Mr.Ragupathy, the Chief Secretary, had strongly recommendedin para 7(c) of the proceedings, Ex.P74 that penalty provision neednot be enforced as orders for supply of the balance materials werecancelled. The said proceedings were approved by the FinancialSecretary and the Chief Minister. Based on the said proceedings, theorders placed with the suppliers stood cancelled on 7.8.1992. Thecancellation of the orders placed to the suppliers was informed toPW75 only on 10.8.1992. PW75 placed a note which was approved by PW65to the effect that penalty might be levied for unsupplied sareesnumbering 5.476 lakhs and 19.797 dhoties as on 7.8.1992. It is foundthat the parties had already supplied the goods for the value of theadvance made to them as on the cancellation of the order on 7.8.1992.Therefore, the question of imposing penalty for the unsuppliedportion of the sarees and dhoties would not arise. But, it is foundthat A1, after having discussed with PW65 and PW75, thought it fit tolevy penalty on the suppliers as they had not completed the schemewithin the time frame fixed and he also ventured to blacklist thosesuppliers so that they would not get any orders in future from theGovernment. 43. PW65 would admit that PW75 discussed the matter with theMinister (A1) and the file was sent to him on 20.12.1992. PW65 wouldnow claim that the word "Secretary" was found struck off when thefile was sent to him. It is his affirmative stand that the matter wasnot at all discussed with him. But, quite surprisingly, when he wasexamined by the investigating official with respect to the deletionof the word "Secretary" in the Circulation Note, Ex.P74 he did notchoose to inform the police about the same. He had also not enquired https://hcservices.ecourts.gov.in/hcservices/ in the office as to why the word "Secretary" was struck off in thecirculation note, ex.P74. He never ventured to find out who actuallystruck off that word. Having found that the word "Secretary" wasdeleted in the Circulation Note, Ex.P74, he now conveniently deposesthat he was not discussed with respect to the Circulation Note,Ex.P74. The file had come down to him on 21.12.1992 with the orderspassed by the Minister (A1). It has been clearly stated therein thatthe penalty of Rs.50,000/= may be imposed on each of the parties.The above facts and circumstances would indicate that the word"Secretary" was not originally struck off when PW65 was examined bythe police during the course of investigation. 44. PW80, the investigating officer in this case also wouldconveniently say that he failed to examine PW65 with reference to thedeletion of the word "Secretary" from the Circulation Note, Ex.P74.The duty cast upon the investigating officer to find who actuallystruck off the word "Secretary" from the Circulation Note was notdischarged by him. In the above factual scenario, the court cannotignore the fact that PW75 Mr.Muneer Hoda was dropped from the arrayof the accused at the time when the charge sheet was laid by PW80.PW75 also, on his part, would depose before the court that he havingcome to know that he was impleaded as one of the accused in thiscase, gave statement before the learned Judicial Magistrate in orderto save himself from the complicity in this case. 45. It is the definite evidence of PW65 that he wanted the fileto be circulated to the Minister for Finance since the proposalinvolved levy of penalty of Rs.50,000/=, but, the first accused madea note that such a necessity for circulation to the Minister ofFinance did not arise as no expenditure on the part of the Governmentwas involved. PW65 would state that necessary instructions as to howfiles should be dealt with are found in the Government of TamilnaduBusiness Rules and Secretariat Instructions. He has not referred tothe rule as per which the file should be marked to the FinanceDepartment. He would also admit that he could not recollect if therewas any such rule. 46. PW80, the investigating officer in this case has simply madesome oral enquries as to how the files should be dealt with at theSecretariat. PW30 and PW31, who were examined by PW80 with respectthereto have not spoken to anything about the procedure adopted bythe Secretariat while marking files to various Departments. Noinstructions concerning movement of the files at the Secretariat wasproduced before the court.47. The only objection raised by PW65 was that the file was notcirculated to the Finance Department. When such an objection wasoverruled by the Minister, he would depose that he had no other sayexcept accepting the same. It is his admitted position that if anymistake was committed in adhering to certain procedures, it is his https://hcservices.ecourts.gov.in/hcservices/ duty to point out the same. Even if a Minister commits any mistake,he is duty bound to point it out. But, the evidence on record wouldindicate that he had not objected to the orders passed by theMinister(A1) that there was no necessity to mark the file to theFinance Department. It is further found that PW65 had also notobjected to the quantum of penalty that was fixed by the Minister.The above facts and circumstances would indicate that the tokenpenalty was imposed on the defaulting suppliers only afterinteraction with PW65 and PW75. 48. The said file was received by A1 on 30.3.1992. The filerelating to Ex.P74 was sent to the Chief Minister on 16.4.1992 afterA1 made a note having entered into a discussion with the Departmentof Handlooms and Textiles. It is found that the file was held up inthe office of the Chief Minister for more than three months and thefile was cleared only on 7.8.1992. PW65 received the file on10.8.1992 and brought to the notice of A1 on 25.8.1992. The filereceived by the first accused was sent back to PW65 on 25.8.1992 andthe same was held up in his office till 20.10.1992. A1 received thefile on 20.10.1992 and the orders were passed by A1 as stated above.Therefore, it could be seen that there is no delay on the part of A1in dealing with the file Ex.P74. The prosecution failed to establishthat A1 violated any procedure, norms or Government instructions andthereby committed criminal breach of trust to cause loss to the fundsof the Tamil Nadu Textile Corporation. 49. Coming to the sanction accorded by the Government ofTamilnadu to prosecute A1 under section 197(5)(b) of the Code ofCriminal Procedure, it is found that request for such sanction hademanated from the Additional Director General of Police (Crimes). Itis submitted by the learned counsel appearing for the appellant thatthe sanction order Ex.P66 is vitiated. 50. But, the learned Special Public Prosecutor would contendthat sanction was properly accorded by the Governor of Tamilnadu toprosecute the first accused. To speak about the sanction accorded bythe Governor of Tamilnadu to prosecute A1, an Assistant Secretary,General (Confidential), Secretariat one Mr.R.Mahadevan was examinedas PW40. Firstly, he was not examined by the police. The sanctionorder, Ex.P66 was admittedly signed by one M.Devaraj by order and inthe name of Governor of Tamilnadu. The prosecution has not chosen toexamine the said Devaraj. PW40 would simply state that he only sentthe proposal for sanction. He was not aware as to who actuallysubmitted the papers before the Governor of Tamilnadu for obtainingsanction for prosecution as against A1. He did not know as to howmany witnesses were examined by the investigating agency and how manystatements and witnesses were sent to the Governor of Tamilnadu forobtaining sanction. He would candidly admit that he did not know allthose particulars. https://hcservices.ecourts.gov.in/hcservices/

51. PW40 would state that all the records relating to this casewere despatched to the Governor of Tamilnadu on 30.1.1997 and thesanction order was passed and the file was returned on the very sameday to the Secretariat. The original sanction order accorded by theGovernor of Tamilnadu was not produced before the court. Thesanction order, Ex.P66 also do not reflect that the statements ofwitnesses and the materials seized and recovered were perusedbeforeever sanction was accorded. More importantly, sanction orderdid not indicate under what circumstances PW75 Muneer Hoda wasexonerated from the prosecution. There is no dispute to the factthat voluminous materials were collected by the investigating agencyin this matter. It is humanely impossible to thoroughly peruse theentire material documents beforeever according sanction in a day. 52. In this case, it is found that the file was sent to theGovernor of Tamilnadu with a pre-conceived opinion that it is a fitcase to accord sanction. Even if the Minister ceased to be theMinister, sanction for prosecution is mandatory under section 197(1)of the Code of Criminal Procedure. In view of the above facts andcircumstances, the court comes to the decision without any hesitationthat the sanction for prosecution is vitiated. 53. Therefore, it is held that charges of conspiracy, criminalbreach of trust, cheating, criminal misconduct by abusing hisofficial position as public servant, abetment to commit criminalbreach of trust and receipt of pecuniary advantage framed as againstA1 stood not proved by the prosecution. 54. Let us now deal with the charges framed as against thesecond accused R.N.Jayaprakash. It is alleged that the secondaccused R.N.Jayaprakash threatened Mr.V.Kanagaraj, PW2 saying that A1was very unhappy with him and asked him to proceed on leave. He alsoinformed him that the first accused intended to post one Narasimmaluin the place of Mr.V.Kanagaraj as Managing Director of TNTC as he wasnot amenable to him. 55. It is found that all the accused stood trial, but, quiteunfortunately, the judgment against all the accused except A2 waspronounced on 16.3.2000 and the case against the second accused wassplit up in though he was present to receive the verdict. The caseagainst the absconding accused would normally be split up. In case,one of the accused chooses not to co-operate with the trial of thecase and wantonly disrupts the trial proceedings, the court may thinkin terms of splitting up his case for the sake of convenience as theother accused who are in incarceration shall not suffer on account ofthe pendency of trial. But, in this case, no reason was assigned bythe Trial Judge as to why the case as against this appellant, whofully co-operated with the other accused for the ongoing trial wassplit up not during the course of recording evidence but at the timewhen the judgment was pronounced. It is also not the case where the https://hcservices.ecourts.gov.in/hcservices/ court thought it fit to give opportunity to the prosecution asagainst the second accused to address a particular issue relating tohim and therefore, it chose to split up the case as against the saidaccused. It is found that the new incumbent Judge chose to pronouncethe judgment as against the second accused whose case was split up onthe basis of the very same materials already recorded in the presenceof all the accused including the second accused. At any rate at thisdistance of time, the above said improper procedure adhered to by theTrial Court is ignored by this court as no prejudice was caused tothe appellant/second accused in pronouncing the judgment later inpoint of time after splitting up the case as against him on the verysame materials. 56. PW2, during the course of chief examination, deposed asfollows:-"When I was in the office, I received a phone callfrom one J.P. i.e., Jayaprakash after a lapse ofone week from the date of the D.O. Letter, Ex.P19written by him. Jayaprakash introduced himselfover phone that he was a relative of the Minister.He stated that the Minister was very angry with himas I expressed my inability to make payment ofadvance. Therefore, the Minister wants me to go onleave and the Minister wants to appoint oneNarasimmalu in my place."57. During the course of cross-examination, PW2 has come outwith the following version:-"I do not remember the purchase of sarees anddhoties worth rupees eighteen crores through TNTCin the year 1992. I disbursed advance payments on26.12.1991, 21.12.1991 and 13.1.1992. A sum ofrupees twelve crores was released by way ofadvance by me. I do not remember whether thetotal advance amount received by TNTC from theGovernment upto 31.1.1992 was Rs.12.5 crores. Itis correct to state that I disbursed to thesuppliers the entire sum of Rs.12.5 croresreceived upto 31.1.1992. I do not remember that Iapplied for medical leave on 20.1.1992. I do nothave any acquaintance with the second accused whenI went to the Minister's residence. I have seenthe second accused. A2 has spoken to me only onceon telephone. I am not acquainted with the voiceof A2 on telephone as A2 spoke to me on telephoneonly on that occasion. He has spoken to me inperson. When A2 spoke to me on phone, I told himthat I had already applied for medical leave." https://hcservices.ecourts.gov.in/hcservices/

58. The above version of PW2 would disclose that he had nooccasion earlier to converse with him over phone. A2 has stoutlydenied such conversation embarked upon by him with PW2. The TrialCourt has returned a judgment of conviction as against the secondaccused solely based on the unacquainted telephonic voice of A2allegedly heard by PW2. The records relating to the receipt oftelephone message in the voice of PW2 was not produced by theprosecuting agency. Nothing is on record to establish, when there isa denial from A2, that he did make telephone call to PW2. In theabove circumstances, it is totally unsafe to rely upon theuncorroborated testimony of PW2 that he received a message from A2 asto the displeasure expressed by A1 and the proposal to transfer himand appoint one Narasimmalu in his place. 59. In the chief examination, PW2 has categorically stated thathe informed A2 that he had already applied for medical leave. PW17P.Wintzer Singh, Section Officer, General (Special-A) Department,Secretariat, Chennai has spoken to the fact that PW2 applied formedical leave as per the application, Ex.P46 dated 20.1.1992. PW2had already released the entire advance to the tune of Rs.12.5 croreson 26.12.1991, 31.12.1991 and 13.1.1992 as evidenced by Exs.D5 andD11. It is relevant to refer to the evidence of PW2 that even at thetime when the second accused contacted him over phone, he informedhim that he had already applied medical leave. Therefore, the saidtelephonic call had emanated from A2 to PW2 after the application formedical leave was submitted by PW2 on 20.1.1992. The admittedposition is that the entire advance amount of Rs.12.5 crores wasalready released by PW2 to the suppliers even before he applied formedical leave on 20.1.1992 and therefore, no threatening call wouldhave emanated from A2 on the ground that PW2 failed to release theadvance amount to the suppliers. Therefore, the version of PW2 withregard to the threatening call emanated from A1 and A2 is found to beshaky. 60. Of course, it is a well settled position of law thatconviction can very well be based on a sole testimony of a solitarywitness. The court must be satisfied that implicit reliance can beplaced on the testimony of such a solitary witness and his testimonyis totally free from any blemish. In such circumstances, withoutscouting for corroboration, the court can base its conviction on thetestimony of a solitary witness. It is totally unsafe to convict thesecond accused solely based on the uncorroborated testimony of PW2who has come out with such an inconsistent stand. The Trial Court hasfailed to appreciate that the evidence of PW2 is not free from thecloud of suspicion. The prosecution also has failed to bring onrecord the materials to cumulatively form a chain of circumstances toclamp the accused with the charge of conspiracy. The theory ofconspiracy projected by the prosecution cannot even be imagined as https://hcservices.ecourts.gov.in/hcservices/ against the second accused. Solely based on such a truncated versionof PW2 as against the second accused, it is highly unsafe to decidethat such a phone call was made by the second accused to PW2. Thenature and content of the call spoken to by PW2 was completelydemolished by the second accused. The alleged telephone call made bythe second accused cannot be held to be adequate to convict A2 withthe commission of crime alleged against him. 61. Surprisingly, the Trial Court made a comment that evenduring the questioning under section 313 of the Code of CriminalProcedure, the second accused has not chosen to deny the telephonicconversation he had with PW2. On a perusal of the answers given byA2, when he was questioned under section 313 of the Code of CriminalProcedure, it is seen that he has categorically denied the case ofthe prosecution that he had telephonic conversation with PW2. 62. The Trial Court, as rightly pointed out that the learnedcounsel appearing for the second accused, failed to appreciate thequestion put to the second accused under section 313 of the Code ofCriminal Procedure and the answer given by him. In view of theabove facts and circumstances, it is held that none of the chargesframed as against the second accused stood established by theprosecution beyond reasonable doubt. 63. Coming to the charge framed as against the third accusedR.Narasimmalu, the then Managing Director of TNTC, it is alleged thathe failed to adhere to the procedures and Government instructionswhile purchasing sarees and dhotes for free distribution duringPongal Season of the year 1992 and thereby he committed criminalbreach of trust. It is alleged that he cheated the Tamil NaduTextile Corporation/Government of Tamilnadu by accepting the supplyof sub-standard and lesser specification sarees and dhoties. Thefurther allegation is that he also cheated the Tamil Nadu TextileCorporation/Government of Tamilnadu by dishonestly inducing theGovernment to part with huge funds to the said Corporation for supplyof sub-standard and lesser specification sarees. 64. It is on record that the scheme for free supply of sareesand dhoties was mooted in the month of November 1991 and the schemegot sanctioned by issuance of G.O. No.292 dated 27.11.1991 (Ex.P72).G.O. No.304 dated 15.12.1991 (Ex.P73) was issued by the Government ofTamilnadu for supply of 30 lakhs dhoties and 40 lakhs sarees by wayof procurement of tenders. The proposals of the Director ofHandlooms and Textiles were examined and accepted by the Governmentof Tamilnadu. As per the letter dated 15.12.1991 (Ex.P110), theSecretary to Government directed the Managing Director of TNTC,Coimbatore and the Director of Handlooms and Textiles, Madras toadhere to certain procedures while releasing the advance amount tothe suppliers. Under Ex.P3 dated 24.12.1991, the allotment of thequantity of supplies to be made was communicated to the tenderers. https://hcservices.ecourts.gov.in/hcservices/ Six tenderers were originally selected on the basis of the samplesand rates given by each of the tenderers, it is admitted by PW62Secretary, Handooms and Textiles, Department. PW62 had sent acirculation note, Ex.P120 alongwith the draft agreement to be enteredinto with the suppliers by TNTC. Ex.P120 had received the approvalof the Chief Minister which would go to establish that the ChiefMinister approved the successful tenderers, the draft agreement andthe payment of 50% which comes to Rs.12.50 crores as advance paymentto the suppliers. The above circulation note was approved by PW62the Secretary, Handloom and Textiles Department, A2 Minister forHandlooms, Finance Secretary and the Chief Minister. PW75 Director,Handlooms and Textiles was in charge of overseeing the aforesaidscheme. The TNTC was asked to enter into agreement with thesuppliers and disburse payment for the supplies made. The forms ofagreement, Exs.P14 to P16 were sent by the Government with adirection to the TNTC to enter into an agreement with the privatesuppliers. PW75, the Director, Handlooms and Textiles directed TNTCto enter into agreement and give advance to them and also makepayments for the supplies made. The Managing Director and staff ofTNTC have entered into agreements with the suppliers, made advancesand payments to the suppliers. 65. The scheme was approved by the Government of Tamilnadu. Thefile concerned was seen and approved by the Finance Secretary. Thedraft agreement was also seen by him. Clause 7 of the agreements,Exs.P14 to P16 contemplates payment of advance amount equivalent to25% of the value of the contract to the suppliers. The aforesaidclause found in the agreement does not stipulate that the advanceamount shall be disbursed only after obtaining proper securitytherefor. TNTC was bound to give legal effect to the terms ofagreements, Exs.P14 to P16 entered into by it with the privatesuppliers. As rightly pointed out by the learned counsel appearingfor the appellants, the prosecution has proceeded on a wrong footingthat the instruction flowed from the Finance Department to insist forsecurity for the advance payment was not adhered to by the accused,throwing to wind the aforesaid clause 7 found in those agreements todisburse the advance amount equivalent to 25% of the value of thecontract. 66. Exs.P14 to P16 were entered into between TNTC and theprivate suppliers on 18.12.1991. But, Ex.P54, the communicationemanated from the Finance Department was issued only on 21.12.1991.The internal communication Ex.P54 within the Department will not haveoverruling effect on clause 7 found in Exs.P14 to P16. If at allTNTC could pursue the private suppliers to enter into a freshagreement or additional agreement pursuant to the communication,Ex.P54 issued by the Finance Department and a clause was introducedto make payments of advances only on furnishing proper security https://hcservices.ecourts.gov.in/hcservices/ therefor, then the prosecution has a case. Release of advance amountin terms of the agreement entered into between the parties, ignoringthe subsequent internal communication issued under Ex.P54 will notmake out any criminal offence.67. The discrepancy between the lawful agreement entered intobetween the parties and the communication, Ex.P54 issued by theFinance Department were brought to the notice of PW75 Mr.Muneer Hoda,Director, Handlooms and Textiles by PW1, PW2 and PW56. They wereassured by PW75 that he would take up the matter with the FinanceDepartment and would see to it that suitable modifications were madeto the communication under Ex.P54 issued by the Government. It isalso found that a threadbare discussion was held with respect tothe aforesaid issue in the TNTC Board Meeting that was held on31.12.1991. Therefore, no irregularity in making payment of advanceas per the terms of the agreement could be complained of by theGovernment. 68. PW2 Mr.Kanagaraj was the Managing Director, TNTC Coimbatoretill 9.2.1992. The scheme was conceptualized, tenders werefinalised, tenderers were identified, advance amount was received byTNTC from the Government, the tenderers commenced supplies of dhotiesand sarees and advance payments were released on 26.12.1991,31.12.1991 and 13.1.1992 to the tenderers only during the tenure ofPW2 Mr.Kanagaraj. The third accused R.Narasimmalu succeeded PW2 asManaging Director, TNTC only on 10.2.1992. 69. The third accused had received supplies of dhoties andsarees for the value of rupees nine crores for the advance paymentalready released by PW2. He had also received further supplies ofthe materials worth about rupees six crores. Ignoring the aforesaidfacts and circumstances, it is found that, the prosecution has comeout with a case that an advance payment of rupees 1.22 crores wasmade to Balaji Agencies in excess to payment already made. Separateagreements had been entered into by all the three firms. The threefirms had been accepted as independent entities by TNTC. They hadsubmitted separate bills towards their individual accounts. It istrue that an advance amount of Rs.3,92,24,000/= was paid to BalajiAgencies, but, as on 20.3.1992, Balaji Agencies had already suppliedgoods worth Rs.5,14,30,980/=. Thus the payment of rupees 1.22 croresby A3 to Balaji Agencies was for the supply they have made over andabove the advance amount already paid to them by PW2. In fact, A3had settled the bills of Balaji Agencies after adjusting the advanceamount already paid by PW2 to the said Agency. The letter, Ex.P30dated 23.9.1992 shot off by A3 to M/s.Cotton Yarn Textiles andCompany and M/s.Raj Apparel would establish that A3 had called uponthose firms to make supplies without any further delay before31.3.1992 as the amounts received by them as advance were pendingwith them. https://hcservices.ecourts.gov.in/hcservices/

70. It is contended that A3 chose to release further amount tothe suppliers inspite of the contra direction issued by PW75 underEx.P130. On a careful perusal of Ex.P130, it is found that it wasonly an office note found in the files of Director of Handlooms,Chennai addressed to the Superintendent, 'H' Section of the sameoffice and not an official letter. There is nothing on record toshow that Ex.P130 was communicated to the third accused while he wasfunctioning as Managing Director of Tamil Nadu Textile Corporation,Coimbatore. Therefore, the allegation that the third accused choseto ignore the communication, Ex.P130 sent by PW75 and releasedadvance payment does not have a leg to stand upon. 71. It is further alleged that the letters, Exs.D14 to D20written by PW75, Director of Handlooms and Textiles between April1992 and August 1992 to the third accused would go to show that PW75had in fact directed the third accused to make supplies of sarees anddhoties various Colectorates. Those letters were written by PW75subsequent to 4.5.1992, the alleged date of communication sent byPW75 to stop release of further advance. On the contrary, Exs.D19and D20 would demonstrate that PW75 had been instructing the thirdaccused to continue supply of sarees and dhoties upto 2.8.1992 and4.8.1992 respectively. M/s.Cotton Yarn Textiles and M/s.BalajiAgencies had completed the supplies for the amount of advancereleased to them and they had no balance of supply to be made. Infact, Cotton Yarn Textiles supplied goods worth Rs.11,86,492.80 overand above the advance amount and Balaji Agencies had also suppliedgoods worth Rs.40,148/= over and above the advance amount released tothem. The third accused had strictly adhered to the stipulation foundunder clause 7 of Exs.P14 to P16 in releasing 25% of advance to thesuppliers. 72. The other allegation as against the third accused is that hepaid godown rent, insurance fees and transport charges for a sum ofRs.1,70,000/= for the sarees seized on 25.7.1992 from Raja RamApparels and kept in store. It is found that PW75 had instructed thethird accused under Ex.D1 to seize the goods from Raja Ram Apparelsequivalent to the amount of advance pending with them. The saidinstruction had been issued by PW75 about 12 days prior to thecancellation of the orders which is confirmed by PW56 Govindarajan,Manager, TNTC. He would further depose that the said seizure ofgoods was insisted in order to avoid laying of civil suit forrecovery of the advance amount which would be a time consumingprocess. The fact remains that TNTC had no godown facilities.Therefore, A3 had to hire a place to keep the seized goods worthRs.60 lakhs and take insurance coverage for the said goods kept in athird party place in order to safeguard the property of Tamil NaduTextile Corporation. The goods had to be necessarily transported tothe respective Taluk Offices for distribution to the beneficiaries. https://hcservices.ecourts.gov.in/hcservices/ Even in case of transportation of the goods by the suppliers, TNTChad borne the transport charges. In view of the above, theallegation that the third accused incurred unnecessary expendituretowards payment of godown rent, insurance fees and transport chargesdoes not survive legal scrutiny. 73. It is on record that 1,70,000 sarees were segregated as theywere found to be as per specifications and were sent for distributionto the beneficiaries. PW7 Thiagarajan, Assistant attached to TNTCwould admit that 18,400 sarees which were not upto the specificationwere returned to M/s.Raja Ram Apparels. No evidence is forthcomingfrom the side of the prosecution to establish that 1,70,000 sareesmeasured only 4.5 metres. Further, PW8 V.Gurusamy, Assistant, SalesSection, TNTC, Coimbatore and PW9 M.A.Perumal Raja in their evidencehave admitted that receiving acknowledgment and making payment forthe supply of sarees and dhoties directly despatched by the suppliersto the Taluk Offices and received by the revenue officials were theduties of TNTC. 74. As per the instruction found in Ex.P120 issued by PW62,Secretary, Handlooms Department, as soon as the supplies were made,samples would be drawn from different lots for test checking and thetenderers might depute their representatives for verificationalongwith the representatives of the Director of Handlooms andTextiles/Collectorate in this behalf at the time of test checking.In the circulars, Exs.D24 and D25 issued by PW75, the CircleAssistant Directors were requested to depute their Junior TechnicalAssistant/Senior Technical Assistant to the Collectorate and checkthe quality with respect to the specifications already communicatedin respect of Handloom goods produced by Power Loom Co-operativeSocieties. In the aforesaid communication, TNTC was not instructedto inspect the goods, may be on account of huge volume of inspectionwork involved in the said process and the shortage of officials withTNTC.75. P.Ws.5, 11, 15, 16, 18, 19, 20, 24, 27, 29, 43 and 58 hadgone for inspection to various Taluk Offices and having inspected thesupplies made by the suppliers, submitted their report, Exs.P22, 23,37, 41, 43, 47, 48 51, 71 and 133. The fact remains that none of thereports was sent to the TNTC nor was any copy thereof marked to TNTC.Exs.D19 to D22 would establish that the third accused instructed thesuppliers to take back the goods which were found defective andarrange to replace the same, the moment it was brought to the noticeof the third accused by PW75 about certain complaints of supply ofdefective goods. The above facts and circumstances would clinchinglyshow that the third accused had no role to play in the matter ofinspection of the alleged inferior quality goods supplied by theprivate suppliers. PW5 Rajendran would depose that he seized twodefective sarees under Ex.P22. Quite unfortunately, those two https://hcservices.ecourts.gov.in/hcservices/ defective sarees were not produced before the court. 76. The third accused had acted all along only under theguidance and instruction of PW75. On 20.12.1992, a letter was sentby the Government to levy a penalty of Rs.50,000/= on each of thethree private suppliers. The third accused had carried out theGovernment instruction found therein diligently. There is no termsand conditions found in Exs.P14 to P16 to forfeit the earnest moneydeposit made by the private suppliers. The Government also videletter dated 20.12.1992, had not instructed the third accused toforfeit the earnest money deposit made by the private suppliers.PW34 Mr.K.Velayutham, Managing Director, TNTC, who succeeded thethird accused, would admit the aforesaid position. 77. TNTC had paid a sum of Rs.18,24,34,718/= to the privatesuppliers and received dhoties and sarees for the said amount. Thepayments had been disbursed only in accordance with the instructionsflowed from PW75 under Exs.D23 and D24. 78. It is found that A3 had served as an Administrative Officerin Madurai District Co-operative Spinning Mill at Melur. In orderto implement a huge scheme floated by the Government within a shortspan of time, he had been appointed as Managing Director, TNTCreplacing PW2. He cannot be found fault for such a shuffle. He wasnot involved in finalising the tenders and identifying the tenderers.79. The third accused had taken over charge from PW2 as ManagingDirector, TNTC on 10.2.1992 when the scheme was in the process ofimplementation and about 70% of the advance amount was alreadyreleased. It appears that the third accused made earnest efforts andprocured sarees and dhoties from the suppliers for the advance amountalready released to them within a short span of about six months. Hehad also levied penalty for the shortfall of supplies. Noirregularity in procurement and distribution of sarees and dhotiesduring the tenure of A3 was established by the prosecution. Theconspiracy theory slapped on the third accused lacks foundation. 80. Though there is an allegation that wrongful loss was causedto the Tamil Nadu Textile Corporation/Government of Tamilnadu onaccount of the conduct of A3, there is virtually no evidencewhatsoever adduced by the prosecution to establish the said loss.P.Ws.1, 2, 6, 7, 8, 9, 34, 56 and 75 were directly involved in theimplementation of the said scheme. None of them has referred to theloss caused to the Government. No documentary evidence also wasproduced to establish the pecuniary loss to the TNTC/Government ofTamilnadu. Nor was any evidence adduced to establish that A3 gotpecuniary advantage in the implementation of the said scheme. Inview of the above, the court finds that the prosecution has failed toestablish any of the charges framed against the third accusedNarasimmalu. 81. Now let us take up the case of the prosecution as against https://hcservices.ecourts.gov.in/hcservices/ the fourth accused R.Selvaraju. The allegation is that he caused lossto the TNTC/Government of Tamilnadu. He, with the connivance of A1and A3 cheated the Tamil Nadu Textile Corporation a sum ofRs.41,99,517/=. A4 alongwith the other accused got himself enrichedat the cost of the TNTC/Government of Tamilnadu. The core allegationis that with the intention to cheat the Government causing lossthereby, the fourth accused alongwith other accused, supplied clotheswith lesser quality and also with lesser measurement. 82. There is virtually no evidence to rope in the accused forthe offence of criminal conspiracy allegedly hatched by him alongwithother accused. That the dhoties and sarees supplied by the fourthaccused Selvaraju were inferior in quality and lesser in measurementwas the core charge as against the fourth accused. The prosecutionchose to examine P.Ws.5, 11, 14, 15, 16, 18, 19, 20, 21, 27, 29, 33,43, 52 and 58 to speak about the inferior quality of the dhoties andsarees supplied by the fourth accused. 83. PW11 N.Karnan, Assistant Director, Handlooms Department,Erode had submitted a report Ex.P22 dated 8.3.1992 to PW75, Directorof Handlooms and Textiles. He was said to have produced two sareeswhich were found defective in quality from Lalgudi Taluk. There isno explanation from the prosecution as to what happened to those twosarees alleged to have been seized and produced by PW2 during thecourse of inspection. Those two sarees should have been produced asM.Os to decide whether those sarees were of inferior quality and werelesser in measurement. The non production of those two sareesallegedly seized by PW11 goes to the root of the case of theprosecution. 84. As per Ex.P110, as soon as supplies were made, the samplesshall be drawn from different lots for test check and therepresentative of the tenderer shall be associated for verificationof the samples alongwith the representatives of the Director ofHandlooms and Textiles/Collector authorised in that behalf at thetime of test check. PW11 has simply submitted a report to PW75. Thecopy of the report was not sent to the fourth accused. There isnothing on record to show that the defective dhoties and sarees wereinspected by PW4 in the presence of the representative of the fourthaccused as contemplated under Ex.P110. 85. PW14 S.Suriyanarayanan, Senior Assistant, K4 Section,Collectorate, Erode has spoken to the defective sarees with lessermeasurements. The fact remains that those defective sarees weretaken back by the private suppliers under Ex.D6 and the value ofthose sarees were deducted in the account of the suppliers. 86. PW15 S.Muthu Raman, Senior Assistant, K4 Section,Collectorate, Erode spoke about non distribution of sarees receivedfrom Balaji Agencies and the report sent by him by telex to the JointCommissioner of Land Revenue, Chennai, but, it is found that the https://hcservices.ecourts.gov.in/hcservices/ report reflecting the details of discrepancies noted down thereinsubmitted by him was not produced before the court. PW15 cannot speakorally about the report submitted by him without the production ofthe report before the court.87. PW16 D.Padmanabhan, Tahsildar attached to Bhavani hasdeposed that the inferior quality sarees supplied by Balaji Agencieswere taken back and the price of those sarees were deducted fromtheir account as per Ex.D6. 88. As per the evidence of PW18 K.Raman, Junior Assistant, TalukOffice, Namakkal that a person by name R.S.Manian gave a complaintabout the inferior quality sarees supplied by the Firms. Firstly,the said R.S.Manian was not examined on the side of the prosecutionto establish the distribution of defective sarees. PW18 admits thatR.S.Manian had not specifically stated as to from whom the saidinferior quality sarees were received. PW16 would come out with arevelation that he did not see those defective sarees whilesubmitting the report. Admittedly, he had not got any specialtraining to determine the inferior quality of dhoties. Therefore,much importance cannot be attached to the evidence of PW18. 89. PW19 P.Venkatesan, Tahsildar, Paramathi Velore hasrequested PW18 to submit a report after enquiry on the complaintgiven by R.S.Manian. During the course of cross-examination, hewould admit that no other person except the said R.S.Manian lodgedany complaint about supply of inferior quality sarees or dhoties.PW19 could not say on what basis he jumped to a conclusion that thesarees supplied were inferior in quality. Further, the clothes saidto have been distributed to the said Manian were not produced beforethis court. 90. PW20 C.Mathiazhagan was working as Village AdministrativeOfficer. He distributed the clothes of inferior quality to the poorpeople of Pandamangalam village, he deposes before the court. Duringthe course of cross examination, he would admit that it was notpossible for him to say on what basis he arrived at a conclusion thatthose clothes were of inferior quality. He was also not aware as tohow many clothes were of inferior quality. It is his version that thepeople who got supply of clothes free of cost did not also complainof any defect in the dhoties and sarees received by them. Therefore,the evidence of PW20 does not in any way support the case of theprosecution. 91. PW21 S.Selvam was working as Technical Assistant-SeniorGrade (Handloom). He would depose that a clothe with measurement of3x3 inches was sent to him and he submitted a report, Ex.P49 afterexamining the said clothe with respect to its quality. There is nomaterial on record to establish that the sample clothe with themeasurement of 3x3 inches was drawn from the clothes distributed tothe poor. Therefore, his evidence is not sufficient to prove the https://hcservices.ecourts.gov.in/hcservices/ charge as against the accused that he supplied inferior quality andlesser in measurement clothes.92. PW5 was instructed by PW75 to take the measurement of theclothes. According to PW5, he checked the said clothes and found thethe seal of one Janatha Clothes of West Bengal. He measured tensarees in the said pracel and found that those sarees were with alength of 4.45 to 4.65 metres. It is his evidence that he checkedthe dhoties and found that they were good quality products.Unfortunately, he had not preserved those dhoties and sarees withinferior quality supplied to the poor.93. As per Ex.P110, the representative of the supplier shouldalso have been associated during the course of checking the sareesand dhoties, but, no one has spoken about the association of therepresentatives of the private suppliers while checking the defectivesarees and dhoties supplied by them. 94. PW27 A.Bharathidasan, the Tahsildar, Erode Taluk would statethat about 200 sarees with inferior quality were supplied, but, theywere received back as per Ex.D6 by the suppliers and necessarydeduction of the price was made in the account of the respectivesuppliers. Therefore, no criminal liability can be fastened on A4based on the evidence of PW27. 95. PW29 D.Calledwel, Assistant Director, Handlooms, North Arcotwould depose that he proceeded to the office at North Arcot alongwith PW28 and having measured the length of the sarees, he found thatthose sarees were with the length ranging from 4.60 metres to 4.75metres. It is his admission that he did not take notes with respectto the number of sarees checked by him and the number of sarees whichwere found defective in measurement. No written report was alsoprepared by him. It appears that he had not chosen to disclose toanybody till the police officer enquired him on 18.11.1997 about thedefective measurement in the sarees supplied. He would also admitthat no representative of the supplier was present at the time oftest checking done by him. There is no evidence to establish thatthose defective sarees and dhoties were supplied only by the fourthaccused Selvaraju. Therefore, the evidence of PW29 is of no availfor the prosecution. 96. PW33 S.Krishnamurthy, Senior Assistant attached toNagapattinam District Collectorate has stated that there was anallotment of 4,03,000 sarees and 4,04,000 dhoties for NagapattinamDistrict. Out of the said allotment, 2,65,563 sarees and 8600dhoties were procured from Rajaram Apparels. It was informed to PW75Director of Handlooms and Textiles that 2,05,000 sarees were withlesser length and with inferior quality. During the course of crossexamination, he would admit that he had no personal knowledge aboutthe measurement and quality of the materials. He was also not awarethat those sarees were supplied only by Rajaram Apparels. In such https://hcservices.ecourts.gov.in/hcservices/ circumstances, his evidence also cannot be banked upon by theprosecution to prove the charge as against A4. 97. PW43, D.Raju, Assistant Director, Handlooms and Textileshas spoken about the defective measurement in the supply of clothes.It is his evidence that he went to the Taluk Office in PasumponDistrict and drew sample sarees and dhoties and inspected the same.He deposes that the length of the saree was 4.05 metres and thebreadth of the saree was 44. inches. During the course of crossexamination, he would state that 45,277 sarees arrived at the TalukOffice in bundles, but, he was not aware as to how many bundlesarrived there. He did not also know as to how many bundles werechecked and how many samples were drawn from the bundles. He wouldalso admit that neither the supplier nor his representative waspresent at the time of his inspection. He had not kept the defectivesarees separately and seized them under the cover of mahazarimmediately after the inspection was completed by him. He was alsonot aware as to how many sarees were defective in measurement andquality. It is not possible to come to a decision that the sareessent to the Taluk Office, Pasumpon District were supplied only by thefourth accused and some of the sarees supplied by him were defectivein measurement and quality. 98. An attempt was made on the side of the prosecution throughPW76 Prathap Mokashi that short length sarees and dhotes wereprocured from West Bengal and supplied to TNTC. But, PW76 PrathapMokashi would emphatically state that the sarees supplied by himthrough the fourth accused Selvaraju measured 5 metres. PW5 hassupported the defence set up by A4 Selvaraju that the sarees suppliedby him were with proper measurement. There is no embargo under theagreements Exs.P14 to P16 to purchase materials from West Bengal Co-operative Society.99. PW51 M.Jayadev Sha, Production Manager of Bengal HandloomDevelopment Corporation, in his evidence states that he sold sareesto Mokashi Associates, Mumbai. He do not whispher anything about thesupply of sarees either to the fourth accused or to all those firms. 100. PW59 A.S.Kuramani was the accountant of Shanthi Textilesand S.K.Textiles. He never spoke about the procurement of defectivemeasurement and defective quality sarees and dhoties from BalajiAgencies and two other firms. In Exs.P78 to P82, which wereallegedly prepared by him, there is no reference as to themeasurement and the signature of the purchaser. The invoice does notdisclose the length and width of the materials supplied. There isalso no proof for the payment of amount by A4 and his firms. 101. PW60 S.Venkatachalam was the accountant of P.M.Textiles andKosalai Textiles firms. Never has he spoken about the sale of shortlength sarees and dhoties to the fourth accused. On a carefulscrutiny of the documents, Exs.P90 to P93, it is found that there is https://hcservices.ecourts.gov.in/hcservices/ no reference to the measurement therein. 102. PW61 Thangavelu was the proprietor of Shanthi Textiles. Hehas not spoken anything about the supply of short measurement dhotiesand sarees by Shanthi Textiles. The measurements have beenspecifically referred to in the bills given by Shanthi Textiles. 103. PW68 Ganesan of Swarnambigai Textiles, of course, hasdeposed about the short length sarees supplied by him. But, he hadnot specifically referred to the short measurement in Exs.P85 to P87.The signature of the purchaser was not available therein and there isalso no proof for payment of the amount. PW68 would depose thatonly 31,000 sarees were supplied with a length of 4.60 metres. Hesupplied sarees worth Rs.14,00,000/= to Balaji Agencies, RajaramApparels and received only 12,00,000/=. But, during the crossexamination, he would admit that there was no proof for the supplyorders placed by both the firms. There was also no document toestablish the receipt of the said amount of Rs.12,00,000/= from thosetwo firms. He also had not handed over any document to theinvestigating official. The version of PW68 that he made bulk supplyof sarees worth Rs.14,00,000/= and received only a sum ofRs.12,00,000/= without back up documents is found to be totallyunbelievable. There is also no evidence to establish that thosesarees alleged to have been procured by Balaji Agencies and RajaramApparels were supplied only to TNTC. PW68 feigned ignorance of theend utility of those sarees and dhoties allegedly procured by thosetwo firms. 104. PW71 Shanmugam, Proprietor of M.P.S. Textiles did not referto the defective measurement of the sarees and dhoties supplied byhim. PW73 Kuppusamy speaks about sale of sarees during the year1996. We are concerned with the transaction of the year 1991-92.Further, he was not aware of the measurements of the dhoties andsarees supplied by him and the persons to whom the clothes weresupplied.105. PW76 Prathap Mokashi in his evidence has clearly statedthat the fourth accused placed orders for supply of 5 metre lengthsarees and he also sold the sarees with the said measurement to A4 asper his demand. 106. The above discussion embarked upon by the court would go toshow that there was no sufficient material or evidence to establishthat short length dhoties and sarees were procured by A4 and hisfirms and supplied to TNTC. Further, the sample dhoties and sareesdrawn from the bulk supplies made by the private suppliers were notinspected by the authorities in the presence of the private suppliersor their representatives. The authorities concerned cannot levelserious charge of supply of defective measurement and quality sareesand dhoties without associating the private supplier or theirrepresentatives during the course of inspection quite in conformity https://hcservices.ecourts.gov.in/hcservices/ with the terms under Ex.P110 issued by PW62, Secretary, HandloomsDepartment. Therefore, the charge as against the fourth accused thatdefective measurement and quality sarees and dhoties were supplied bythe fourth accused and his firms stand not established. 107. The next serious charge is that a Firm by name BalajiAgency was a fake one inasmuch as the said Firm did not function atdoor No.172 Mettupalayam Road, Coimbatore. It is also alleged thata Firm by name Cotton Yarn Textiles was not functioning at No.1245,Mettupalayam Road, Coimbatore. The fourth accused Selvaraju admitsthat he was supervising those two firms viz., Balaji Agencies andCotton Yarn Agencies. PW12 Sebastian, Assistant attached to K4Section, Collectorate, Erode would depose that he proceeded to doorNo.172, Mettupalayam Road, Coimbatore on 4.1.1992 but, to hissurprise, he found that no company by name Balaji Agency was foundover there. But, during the course of cross examination, he wouldstate that PW14 Surinarayanan, Senior Assistant, K4 Section,Collectorate, Erode instructed him to go over to the said address torequest expeditious supply of the dhoties and sarees to PeriyarDistrict as per the orders placed with them. He would state thatthere were tall buildings. He found two persons over there operatingtelephone in the verandah of the said building. They informed him onenquiry that there were no such Balaji Agencies in the said building.He did not enquire as to their identity. He did not obtain anythingin writing from to vouch safe his visit to the said premises. He wasalso not aware of the details of offices functioning in the said tallbuilding. 108. PW14 in his evidence would state that PW12 gave a report tohim that Balaji Agencies was not functioning at Mettupalayam Road,Coimbatore after paying a visit to the said place. PW14 had nopersonal knowledge about the existence or otherwise of BalajiAgencies at Mettupalayam Road. He contradicts himself and statesfurther that there was no written report received from PW12. PW12had not visited any of the offices located in the tall building toenquire about the location of Balaji Agencies. Therefore, based onthe evidence of PW12 and PW14, the court cannot jump to a conclusionthat a roving enquiry was conducted to establish that there was nofirm located at Mettupalayam Road in the name and style of BalajiAgencies. 109. PW22 P.L. Karuppiah, Deputy Commercial Tax Officer,Coimbatore would state that Balaji Agency and Cotton Yarn Textileswere not registered under the Commercial Tax Act. Non registrationof those two firms under the Commercial Tax Act may invite actionunder the said Act. But, non-registration would not decide the issueas to whether those firms were in existence at the relevant point oftime. https://hcservices.ecourts.gov.in/hcservices/

110. PW23 A.Senthamarai, Village Administrative Officer, wouldstate that he informed the Additional Superintendent who investigatedthe case that Balaji Agencies was not functioning at 581 MettupalayamRoad and Cotton Yarn Mills was not functioning at 1245 MettupalayamRoad, Coimbatore. During the course of cross examination, he wouldadmit that he made an enquiry with the people living nearby duringthe year 1996. He could not say as to whom he had in fact enquiredabout the office of those two firms functioned in the year 1991-92.The transaction is said to have taken place during 1991-92 but, theenquiry was embarked upon by PW23 in the year 1996. It is quiteprobable that the firms functioning at door No.581 and 1245 wouldhave vacated those premises. 111. PW67 R.Ayyasamy owner of the shop bearing No.585Mettupalayam Road would state that no Firm by name Balaji Agency wasfunctioning in the said address. In the chief examination he hasstated that he let out the said building to one Palanisamy andPalanisamy was not doing any business in the said premises as a overbridge was under construction behind the said road. The fourthaccused Selvaraju is the sin-in-law of the said Palanisamy. PW67would admit that the said Palanisamy had paid rent till 1994-95.PW80, the investigating officer in this case would candidly admit inhis evidence that door No.1245 and 1246 were available atMettupalayam Road and both of those buildings belonged to the familyof fourth accused Selvaraju. If those two firms were not inexistence, they could not have distributed about 38,00,000 sarees and7,00,000 dhoties to all Taluk Offices in the State of Tamilnadu. Itis not the case of the fourth accused that all the three firmsmanufactured the sarees and dhoties in their premises and suppliedthem to the Government. It is the admitted case that they procuredclothes from outside and distributed to the Government. Therefore, asmall office room for the Firms is sufficient to transact thevoluminous business of procurement and supply of clothes to theGovernment. Cheques were admittedly given on behalf of those twofirms and they were encashed by remitting them in bank. Therefore,the court finds that the prosecution has miserably failed toestablish that those two firms were fictitious firms. 112. The next allegation as against A4 is that A7 Joseph had putsignature in the cheques issued on bahalf of Balaji Agencies and onbehalf of Cotton Yarn Textiles. The signature of one Kaliammal wasobtained and sent for examination by the handwriting expert. Hersignature did not tally with the signature found in the cheques.Kaliammal was not examined before the court to speak to the fact thather sample signature was obtained by the investigating agency.Therefore, there is a lack of proof that the signature of the motherof A4 by name Kaliammal was obtained by the investigating officer forthe purpose of comparison by the handwriting expert. https://hcservices.ecourts.gov.in/hcservices/

113. PW41 Sundarrajan and PW42 Dharmaraj would state that theygot the signature of A7 Joseph, but, both of them depose that they donot know who the said Joseph was. PW41 would depose that he waspresent at the time of obtaining the signature of Kaliammal by theinvestigating official. It is his version that he was not aware asto who the Kaliammal was. In the above facts and circumstances, thenon examination of Kaliammal before the court deals a deathblow tothe case of the prosecution that the signature of Kaliammal wasforged by A7 Joseph. To top it all, the Trial Court was pleased toacquit A7 Joseph, but, no appeal was preferred by the State asagainst the order of acquittal recorded by the Trial Court. Inasmuchas the Trial Court has completely disbelieved the version of theprosecution that A7 forged the signature of Kaliammal, the charge asagainst A4 that cheques were encashed in the name of Kaliammal byfloating a fictitious firm also falls to the ground. 114. PW34 Velayutham, who was working as Managing Director inthe rank of District Revenue Officer, would state that BalajiAgencies got back several thousands of sarees which were founddefective during the year 1992. If at all there was no such Firm,such a large number of sarees would not have been received back bythe Firm during the year 1992. He would also admit that the Firm ofthe fourth accused paid a sum of Rs.50,000/= as fine levied by theGovernment for the delayed supplies of sarees and dhoties. The delayin making supply as per the orders placed with the firms of thefourth accused led to imposition of fine of Rs.50,000/= and the saidamount was also paid by the Firm of the fourth accused. Therefore,the charges as against the fourth accused Selvaraju were notestablished beyond reasonable doubt. 115. Now let us take up the charge against the fifth accusedArvind Kumar R.Shah. PW10 G.Neelakandan, Officer, Lakshmi VilasBank, Coimbatore was examined with the fond hope of establishing thecharges as against the fifth accused. PW10 would state that thefifth accused wanted to open one current account. Such a request wasmade by the fifth accused to PW10 over phone. PW10 has not spoken tothe fact that A5 specifically wanted Lakshmi Vilas Bank, Coimbatoreto open a current account for three firms. PW10 would clearly admitthat accounts in the name of the three firms were opened only on theintroduction of A6 and that the signature of A6 was found in theintroduction form for opening of current account for the three firms.PW10 would depose that 95% of the cheques relating to those threefirms were filled only by A6. The prosecution has not produced evena single cheque filled by A6. 116. It is the version of PW10 that the fifth accused wantedLakshmi Vilas Bank, Coimbatore to accommodate the three firms forobtaining some bank security. At the same time, he would admit thatbank guarantees were given on the basis of cash balance maintained by https://hcservices.ecourts.gov.in/hcservices/ the respective firms. PW10 would further state that the firmstransacted their accounts to the tune rupees 18 crores through theircurrent accounts. No complaint from any source as to the saidtransaction of business with the said bank was reported. Whenactually A6 had put his signature in the introduction form foropening account in the name of the three firms on the basis of thealleged oral communication emanated from A5, A5 cannot be fixed withany criminal liability. 117. Not even a single witness has deposed about the associationof A5 during the course of procurement and supply of the sarees anddhoties to the Government. Nothing is there on record to establishthat he contacted anyone even over phone relating to the procurementand supply of the clothes to the Government. P.Ws.1, 2, 4, 13 and 75are all official witnesses who do not have any personal knowledgeabout the involvement of the fifth accused in the business contractclinched by the fourth accused with the Government. 118. PW1 M.K.Srinivasan, Manager, TNTC would state that PW2Kanagaraj, Managing Director, TNTC and PW4 S.Ramachandran, JointDirector, Handloom and Textiles met A4 and A5 in the house of thelatter and requested them to expedite the supply of sarees anddhoties as per the orders placed. This is projected to show that thefifth accused was in the company of the fourth accused. The aboveversion spoken to by PW1 had been passed on by PW2 as per theevidence of PW1. Therefore, the aforesaid deposition of PW1 is foundto be a hearsay version. To top it all, PW1 never whispered anythingabout the presence of A5 in the company of A4 in his house. He alsohad not spoken to the fact that he visited the house of A5. He alsodid not say that he passed on such an information to PW1. Therefore,the evidence of PW1, apart from the fact that it was hearsay, isfound to be totally unreliable.119. PW13 Balakrishnan, Deputy Director, Handlooms and Textilescomes out with a new story that PW2 and himself went to the house ofA5 on 6.1.1992 and met A4 and A5 over there. He had not enquiredanything about the supply of materials. He did not know where thehouse of the appellant was situated. He was really a stranger to thetransaction as per his own showing. He would state that as PW2and PW4 visited the house of A5, he also accompanied them. He had notinformed anybody about such a visit till he was examined by thepolice sleuth on 21.3.1996. It is very important to note at thisjuncture that PW2 did not state that he made a visit to the house ofA5 alongwith PW4 or PW13. PW4 also has not stated that PW13accompanied him. The evidence of PW13 is also found not believable. 120. PW4 Ramachandran, Joint Director, Handlooms did not deposethat he ever visited the house of A5. His positive evidence is thathe was taken by PW2 to the office of A4 and A5 and not to the houseof A5. PW2 has not corroborated such a version of PW4. PW4 speaks https://hcservices.ecourts.gov.in/hcservices/ about the submission of report on 7.1.1992. But, the prosecution hasnot pressed into service the said report submitted by PW4 for thereasons best known. 121. PW4 S.Ramachandran would further state that afterinteracting with A4 and A5 for about 45 minutes and also afterperusing various documents, letters, copies of demand drafts, etc.,he was fully satisfied that A4 and A5 had taken all necessary stepsto purchase the materials for supply in terms of the orders placed.Even assuming for the sake of argument that A5 associated with A4 inprocurement of clothes and supply of the same to the Government, nomala fides or dishonest intention could be attributed to A5 to cheatthe Government. It is a settled position of law that criminalintention to cheat must be present to constitute an offence ofcheating at the very beginning itself. Therefore, the evidence ofPW1, PW2, PW4 and PW14 failed to connect the fifth accused with anyof the charges levelled as against him. 122. PW75 Mr.Muneer Hoda, Director of Handlooms and Textilesspeaks before the court on the basis of some reports alleged to havebeen received by him. He banks on the report of PW2 dated 9.1.1992marked as Ex.P19. The report would reflect that PW2 had discussionwith the suppliers at their office. There is no reference as to hismeeting with the fifth accused. There is nothing to indicate that hemade a visit to the house of the fifth accused. PW2 did not say thathe made a visit to the house of A5. There is no material to clampthe fifth accused with the charge of forgery. Not even a singlewitness speaks to the pecuniary advantage, the fifth accusedobtained. No one refers to his association with anyone of theaccused to obtain pecuniary advantage. 123. Even assuming for the sake of argument that A5 didrecommend for opening current accounts for three firms, such an actof A5 would not amount to a criminal act. The money credited to theaccount of the three firms were dealt with by the responsible personsof that Firm. There is absolutely nothing on record even to inferdistantly that the fifth accused got pecuniary advantage out of theoperation of those three firms with the bank. The court cannot losesight of the fact that the 7th accused, who allegedly forged thesignature of the mother of the fourth accused was acquitted of allthe charges. In the above facts and circumstances, the court findsthat the prosecution has not made out any case as against the fifthaccused. All the charges framed as against the fifth accused standnot established. 124. Let us now take up the charge as against the 6th accusedP.Muthusamy. The 6th accused was slapped with the charge that heconspired alongwith other accused for doing certain illegal acts forsupply of sarees and dhoties with defective measurement and quality,commission of criminal breach of trust against TNTC/Government of https://hcservices.ecourts.gov.in/hcservices/ Tamilnadu and obtention of pecuniary advantage. 125. There is not even an iota of evidence to show that thesixth accused had any connection with the purchase and supply ofsarees and dhoties to TNTC. There is no material to show that heever facilitated the commission of criminal breach of trust on thefunds of TNTC. No one has spoken about his association with A1 andA2. There is virtually no material to indicate even by inferencethat he was one of the conspirators. There is nothing on record toshow that A6 was in any way connected with A1, A2, A3 and A5 and thathe did any act aiding A4 to commit the offence of criminal breach oftrust. Therefore, the said charge falls to the ground. 126. The 6th accused was charged with the offence of cheatingpunishable under section 420 of the Indian Penal Code. The essenceof the charge is that the 6th accused alongwith A4 and A5 dishonestlyinduced TNTC to pay a total sum of Rs.46,99,517 to the three firms ofA4 in respect of the supply of sub-standard and lesser specificationsarees and dhoties. No witness has spoken to the nexus between A6and TNTC. No one has referred in their evidence the connection of A6with the supply of sarees and dhoties for free distribution to thepoor people. In the absence of any evidence or material rope in A6 toindicate even distantly that he made any representation or inducementeither directly or indirectly to the TNTC in order to deliver anymoney to the firms of the fourth accused, the charge of cheatingslapped on the sixth accused does not stand legal scrutiny. 127. The further charge as against the sixth accused is that hecheated Lakshmi Vilas Bank, Uppilapalayam Branch, Coimbatore bydishonestly inducing the said bank by producing seven forged chequesalleged to have been given by A7 to deliver a total sum ofRs.2,61,98,069.50. The prosecution is bound to establish that thesaid seven cheques were forged by seventh accused and produced bysixth accused in the bank and that the sixth accused, having hadknowledge about the forgery committed by A7 knowingly presentedthose forged cheques in the bank and thereby he dishonestly inducedthe bank to deliver the aforesaid sum of money. 128. The evidence of handwriting expert, PW55 is the onlymaterial available on record to show that A7 forged the signature ofKaliammal. No bank official or any other witness speak about theforgery committed by A7 while visiting the bank for encashing thecheque. 129. Kaliammal, whose signature is alleged to have been forgedin the seven cheques, was not examined in the court though she wascited as one of the prosecution witnesses. The said Kaliammal nevercomplained to the police about the alleged forgery. Nor was anymaterial produced before the court to show that, at any point oftime, she ever complained of forgery committed by A7 to any of theauthorities. To top it all, the Trial Court had acquitted A7 from https://hcservices.ecourts.gov.in/hcservices/ the charge of forgery and the State had not preferred any appeal asagainst the order of acquittal recorded by the Trial Court againstA7. Therefore, the charge of forgery levelled against A6 is not madeout.130. PW35 V.Ramachandran, who was the Manager of Lakshmi VilasBank Limited, Uppilipalayam Branch, Coimbatore speaks to the handingover to the police the challans submitted for obtaining demanddrafts alongwith seven cheques which are said to be forged. But,quite unfortunately, those challans submitted for obtaining demanddrafts were not produced by the prosecution. He would also deposethat he handed over another 23 cheques to the investigating agency.Some of those cheques pertain to the account of Kaliammal. Acomparison of the signature in those cheques would definitely throwsome light on the aforesaid contentious issue with respect to theallegation of forgery. 131. The defence took steps to summon certain documents from thebank relating to the three out of seven cheques and the same weremarked as Exs.D2 to D4. Those three cheques were drawn in favour of"Yourselves". PW54 the bank official admits, on a perusal of Exs.D2to D4, that demand drafts had been obtained by the Firm concerned byusing those three cheques. It has been demonstrated by the defencethat no forgery was committed with regard to those three cheques andthe money was utilised only by the account holder. 132. PW36, the bank official, who passed two of the disputedcheques viz., Exs.P63 and P64, would categorically state thatKaliammal, Proprietrix of Balaji Agencies signed Exs.P63 and P64. Itis his further evidence that he did not notice any difference in thesignature of Kaliammal when he passed those two cheques. PW38,another bank official, who passed the cheque, Ex.P65 would state thatKaliammal had signed the cheque. He had not noticed any variation inthe signature of Kaliammal while passing the said cheque. 133. The defence has established with the aforesaid cogent andacceptable evidence that Exs.P63 to P65, the cheques issued byKaliammal were not forged and that the proceeds of those cheques wereutilised only by the account holder. But, quite unfortunately, theexpert, PW55 would state that those cheques were also forged. As faras other four cheques are concerned, the prosecution failed toexamine any bank official to speak about the passing of thosecheques. We are left with only the uncorroborated testimony of thehandwriting expert to show that the cheques were forged. 134. The court will have to find whether the opinion evidence ofPW55 could be safely relied upon to base a conviction on A6. Theexpert evidence was contradicted by the documents Exs.D2 to D4 and bythe oral testimony of PW36, PW38 and PW54 in connection with thethree cheques, Exs.P63 to P65. No other material is there to https://hcservices.ecourts.gov.in/hcservices/ corroborate the handwriting experts except Exs.P34, P35, P36 andP108. The court will have to bear in mind that his evidence is onlyopinion evidence. To top it all, Kaliammal was not examined to speakabout the forgery and also to speak about the sample signaturesalleged to have been collected from her. In the absence ofKaliammal, no one can assertively say that the sample signature wasobtained by the investigating agency. Therefore, the opinionevidence of PW55 stands rejected. 135. The next question that arises for consideration is whetherthe sixth accused produced those seven cheques to Lakshmi Vilas BankLimited, Uppilipalayam Branch, Coimbatore. PW36 would state thatMuthusamy produced the cheques Exs.P63 and P64 in the bank. PW37,the bank official would depose that Muthusamy received cash for thosetwo cheques. Similarly, PW38, another bank official would state thatMuthusamy produced the cheque, Ex.P65 in the bank and got money. Itis important to note that those witnesses, who were examined on30.6.1999, failed to identify as to whether A6 P.Muthusamy, who waspresent in the court, presented those cheques and encashed the same.Despite the fact that A6 was present in the court, those witnesseshad not identified him in the court. 136. There is absolutely no evidence to establish as to whoactually presented the cheques, Exs.P34, P35, P36 and P108 in thebank and who actually encashed the same. Even assuming for the sakeof argument that A6 in fact presented those three cheques, Exs.P63,P64 and P65, no criminal liability can be fastened on A6 for thecharge of forgery, as the principal charge of forgery as against A7could not be established by the prosecution and as a result of which,A7 got acquitted. There is also no material to show that A6 hadknowledge of such forgery and presented it with mala fide intentionto cheat the bank. Therefore, looking at any angle, the court findsthat the above charge does not bring home guilt to the accused. 137. PW10, the Branch Manager of Lakshmi Vilas Bank,Uppilipalayam Branch would say that A6 signed in introductory columnfound in the account opening form of all the three firms. A6 admitsthat he in fact signed in the introductory column of the accountopening forms of the three firms. Mere introduction of a customerto the bank does not fasten any criminal liability on the introducer.A6 has admitted during the course of proceedings under section 313 ofthe Code of Criminal Procedure that he used to deposit the chequessigned by A4 through one Ramasamy and Sivaprakasam and help them ingetting demand drafts. 138. PW51, the Production Manager of West Bengal Handloom and https://hcservices.ecourts.gov.in/hcservices/ Power Loom Development Corporation would depose that sarees were soldby the said Corporation to TNTC through Mokashi Associates and PratapMokashi, PW76 and one Muthusamy took delivery of the signed challans.PW51 was examined before the Trial Court on 13.8.1999. The appellantwas present in the court on that day. But, PW51 could not identifyA6. Further, his evidence was not supported by Pratap Mokashi, PW76.The disputed signature in the delivery challans were also not sentfor comparison by the expert. Therefore, the evidence of PW76 cannotbe given much credence. PW56, the Marketing Manager of TNTC wouldstate that on 26.12.1991, Muthusamy came on behalf of Balaji Agenciesin a car and he accompanied him to Tiruppur and Erode. He deposesthat he informed PW75 that Aravind Kumar Sha and Muthusamy lookedinto the supply and Muthusamy paid one percent security deposit byway of cheque and asked for 25% advance on behalf of two firms on26.12.1991 and 27.12.1991. It is his further version that PW2Kanagaraj informed Muthusamy that he would talk to PW75 Director ofHandloom and Textiles with respect to the request for payment of 25%advance. But, in the cross examination, PW56 would admit that he didnot have any direct knowledge about the role of the sixth accused inthe firms floated by A4. He would also admit that it was only PW2,the Managing Director who told him that Muthusamy came in a car. PW2Mr.Kanagaraj did not support the version of PW56. PW56 could notidentify A6 on 26.8.1999 when he was examined, even though A6 waspresent in court on that day. PW61, the owner of Shanthi Textilesand S.K.Textiles would depose that Muthusamy handed over the demanddrafts to him for the supply of sarees. A6 vehemently denied theaforesaid version of PW61. It is found that PW61 had not identifiedA6 when he was examined before the Trial Court on 3.9.1991 inspite ofthe fact that A6 was present in court on that day. 139. In view of the above, the court finds that the chargesframed as against the sixth accused also were not established by theprosecution. 140. The prosecution could not establish beyond reasonable doubtthe charges levelled against A1 to A6. The materials produced on theside of the defence throw a grave doubt on the charges against A1 toA6. The Trial Court has misdirected itself and has come to a wrongdecision that A1 to A6 committed offences charged against them.Therefore, the verdict of the Trial Court is liable to be upset andset aside. 141. In view of the above, the judgment of conviction recordedby the Trial Court as against A1 to A6 and the sentence imposed onthem stand set aside. A1 to A6 are acquitted of all the chargesframed as against them and they are set at liberty. The bail bond https://hcservices.ecourts.gov.in/hcservices/ executed by them shall stand annulled. Fine amount, if any, paid bythem shall be returned to them. Consequently, the appeals standallowed. Ssk.Sd/-Asst. Registrar//True Copy//Sub Asst. RegistrarTo1. The XI Additional Sessions Judge, Chennai. 2. Do Through The Principal Sessions Judge, Chennai.3. The Additional Deputy Superintendent of Police, CBCID Chennai.4. The Public Prosecutor, High Court, Madras5. The Superintendent, Central Prison, Vellore.6. The Inspector of Police, CBCID, Chennai.7. The Section Officer, Criminal Section, High Court, Chennai.8. The Superintendent, Central Prison, Chennai.+ 1 cc to Mr. N. Mohideen Basha, Advocate SR No.41195+ 2 ccs to the Public Prosecutor SR 41068•5 ccs to Mrs. Gita Asokan, Advocate SR No.40967 & 41280NG(CO)SR/31.8.2009Criminal Appeal Nos.253, 254, 287,298, 313 and 381 of 2000